SNC-Lavalin Q4 Profit Declines, Sees Flat Profit In FY12; CEO Resigns

3/26/2012 7:17 AM ET

SNC-Lavalin Group Inc. (SNC.TO: Quote,SNCAF.PK) on Monday said its fourth-quarter profit declined from last year despite higher revenues, and that it sees flat profit in fiscal 2012. The Canadian engineering and construction company also said its Chief Executive Officer Pierre Duhaime has stepped down from the position, and it appointed Ian Bourne as Vice-Chairman and Interim Chief Executive Officer.

For its fourth quarter, net income attributable to shareholders was C$76.0 million or C$0.50 per share, lower than last year's C$158.70 million or C$1.04 per share. Excluding the 2010 net gain of C$26.1 million from the disposal of two infrastructure concession investments, prior year's attributable net income totaled C$132.6 million or C$0.87 per share in 2010.

On average, seven analysts polled by Thomson Reuters expected earnings of C$0.44 per share for the quarter. Analysts estimates typically exclude special items.

According to the company, the decline in earnings, on an adjusted basis, mainly reflects an operating loss in the Infrastructure & Environment and the Hydrocarbons & Chemicals segments, chiefly due to unfavorable cost re-forecasts on certain projects as well as loss from a revised position of the company's net financial position related to its Libyan infrastructure projects. These were partially offset by higher operating income, mainly from the Mining & Metallurgy and Operations & Maintenance segments.

Total quarterly revenue grew to C$2.12 billion from year-ago quarter's C$1.83 billion, with improved revenues from Services and Packages.

For the year 2011, attributable net income was C$378.8 million or C$2.49 per share, compared to last year's C$476.7 million or C$3.13 per share. Revenues increased 20.3 percent to C$7.2 billion.

At the end of December 2011, the company's revenue backlog increased to C$10.1 billion from C$9.7 billion last year. Operations & Maintenance revenue backlog decreased 12.9 percent, while the Services revenue backlog increased 57.8 percent.

Further, SNC-Lavalin said its Board of Directors increased the quarterly cash dividend by 4.8 percent to C$0.22 per share for the fourth quarter.

Looking ahead, SNC - Lavalin now expects full-year 2012 net income in line with fiscal 2011. The forecast reflects anticipated improvement in the Power and Mining & Metallurgy segments and the Infrastructure Concession Investments segment, partly offset by the Hydrocarbons & Chemicals and Infrastructure & Environment segments, which would continue to be challenging throughout 2012.

Regarding the stepping down of its CEO, SNC-Lavalin said Duhaime has also stepped down from his position as a director and will retire from the company.

Gwyn Morgan, Chairman of the Board, said, "Pierre has made major contributions to the growth and profitability of the Company during his 23 years of dedicated service. The Board has accepted his decision to step down, and we wish him well in the future."

The company said a search for a new CEO will begin immediately under the direction of the Chairman of the Board. Both internal and external candidates will be considered.

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